A number of retail stores have reported earnings for the 2nd quarter of 2019, and they are good. This morning, Ed Yardeni explains what this means for the economy.

” Consumer spending, looked at from many different angles, still looks healthy. Consumers are spending at Walmart and at Target. They’re spending at restaurants and hotels. And they may have room to spend more, as the saving rate was relatively high at 8.1% during June and personal savings rose to a record $1.3 trillion over the past 12 months through June. Over that same period, real disposable income is up solidly, with a gain of 3.3%. Here’s a look at some more consumer-spending metrics and this week’s earnings reports from retailers confirming that consumer wallets are open—just not at department stores:

Online sales rose to a record $694 billion (saar) during June, well exceeding department stores sales ($138 billion) and sales at warehouse clubs and superstores ($496 billion). Online shopping now accounts for a record 35% of GAFO (general merchandise, apparel and accessories, furniture, and other sales), which includes retailers that specialize in department-store types of merchandise such as furniture & home furnishings, electronics & appliances, clothing & accessories, sporting goods, hobby, book, and music, general merchandise, office supply, stationery, and gift stores.

Bank of America often has a good, early read on consumer spending because it boasts 66 million consumer and small business clients. The bank’s CEO Brian Moynihan told CNBC yesterday that its consumer base spent $2 trillion ytd, a 5.9% increase y/y. “The U.S. consumer continues to spend and that will keep the U.S. economy in good shape,” he said.

(2) Plenty of dry powder. Consumers are benefiting from more jobs and higher wages. The unemployment rate was 3.7% in July, a tick above the 3.6% rate during April and May—which was the lowest rate since December 1969. Real average hourly earnings of production and nonsupervisory workers continued to climb in June, up 1.9% y/y, marking its 80th month of gains.

While consumers are spending some of their newfound dough, they’re saving lots too. The US personal saving rate is in an uptrend, as the absolute amount saved has climbed to new highs, as noted above. Typically, saving rates fall during economic booms as consumers get more optimistic and spend excessively. Saving rates often rise during recessions, when consumers turn more cautious. The saving-rate jump may mean consumers will be able to keep spending more, longer.”

Capital One just announced that 100 million customers in the U.S. and 6 million in Canada had their personal information stolen. From the linked WSJ article: In this latest massive consumer-data breach, a hacker accessed the personal information of 100 million Capital One credit-card customers and applicants in the U.S. and six million in Canada. The breach […]

The New York Times is reporting that China has been beefing up its trade negotiations team. This could indicate that they are more willing to work with the U.S. to come up with a compromise trade deal. From the linked article: BEIJING — Two weeks before talks between the United States and China broke down, […]

From USA Today: “Veterans will have expanded access to medical care outside Department of Veterans Affairs facilities beginning Thursday under a law signed by President Donald Trump last year and touted as a major achievement by Trump on the campaign trail. Rules established under the law and published Wednesday in the Federal Register say the VA […]

After a quiet day yesterday, the market is again falling on the possibility of a protracted trade war with China. From the linked CNBC article: Stocks steadied Wednesday after two days of brutal selling that particularly slammed companies and sectors with exposure to China, like Caterpillar and the semiconductor industry. The market lost its gains late in […]

CNBC reported today that China’s Xi Jinping spent a good portion of his speech about global trade talking about reforming his country’s approach on this issue. “Instead of focusing solely on his signature investment initiative, Chinese President Xi Jinping spent a good portion of a speech at the Friday opening ceremony of China’s Belt and […]

From today’s WSJ: “The Social Security program’s costs will exceed its income in 2020 for the first time since 1982—two years later than officials projected last year—forcing the program to dip into its nearly $3 trillion trust fund to cover benefits. But by 2035, those reserves will be depleted and Social Security will no longer […]

In today’s “Wall Street Journal” there is a fascinating article on the importance of mice to the research of aging. Grace and Blanche, two old mice who were second cousins, reached relative fame before dying within months of each other at their home in Bar Harbor, Maine. Known fondly as the Golden Girls at Jackson […]

As a dog lover, I really enjoyed Dave Barry’s essay today in the Wall Street Journal about learning to be more open like his dog. From the linked article: I turned 70 in the same year that my dog, Lucy, turned 10—or, in dog years, 70. So we’re basically at the same stage of life, […]

From CNBC this morning: “A Goldman Sachs analysis out last week suggests there are misconceptions around the impact of President Donald Trump’s tax cuts. Many on Wall Street and Capitol Hill have said the tax cuts are being spent on corporate stock buybacks and not capital expenditures. Stock buybacks have been under attack on Capitol […]

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